Tag: Finance

The new tax law will offer tax cuts to businesses which raises many questions among leaders as to how to best utilize that capital/ tax savings. Many companies have decided to invest in their people by giving away generous bonuses which embodies the employee-centric philosophy. In addition, to demonstrating your appreciation for your employees you also may find the following tips useful.

Set a % amount to be automatically transferred to a high yield savings account

Reinvest a percentage of the tax savings into your business

Utilize a portion to pay future taxes (again, a high yield savings account dedicated to taxes)

Optimize your employee benefits package

Invest in municipal and treasury bonds (offer great tax savings)

Make those business building improvements you’ve been putting off (another great tax deduction)

Profitability and optimized performance pressure from top management are driving CFOs and Finance executives to develop and maintain effective financial planning and analysis skills. It also means going beyond the numbers by bringing the voice of the customer into the spectrum.

To deliver exemplary financial planning and analysis results, you must have clear understanding of the current business financial and conduct (customer and employee perceptions) standing, compare critical KPI metrics to competitors, analyze the industry to identify value factors and trends that can yield profitability and differentiate your company from competitors coupled with the optimization of client satisfaction, and utilizing the most effective budget model for your business.

For example, your business may use a historical budget model coupled with variance analysis, trends analysis and CRM deals tracking (revenue forecasting). However, for more efficient results, you should also analyze risks (create and maintain an annual risk management plan), make savings as an expense (automate savings for your business), collaborate with HR to assess and properly plan for hires, include an emergency reserve budget for unexpected expenses in your budget, and ensure you have a strong inventory management process.

The 3 most important KPIs in finance are: costs, staff productivity and process efficiency. These should be compared to industry and competitors to realize opportunities for improvement. It is also important to be aware of the costs associated with the staff that handles financial planning, budgeting and forecasting. Some measures of performance that should be tracked to assess costs should be cost per invoice, process cycle time, average receivable days (DSO), lead time, percentage cost to perform the function process as a percentage of total finance process cost, et cetera. These measures of performance should also be benchmarked.

Top management must lead the change in the finance department if they seek to yield optimized productivity and profitability. Effective leaders “walk the talk.” They communicate the changes in strategy and company mission daily to employees and encourage critical KPIs to be visual and periodically reported.

Today, I will discuss how you can optimize your CRM management process for reducing RFP (request for proposal) lead times while increasing profitability. By developing a client quality plan it becomes easier to vet prospects which makes RFP analysis much easier. RFP lead times (time taken to secure RFP) can be reduced by filtering high quality requests based on your quality plan filters which have lower proposal cycle times, higher profit/margin potential and higher probability of attainability.

Lower proposal cycle times can be attained by collaborating with team members and creating proposal templates that require minimal updates based on average or common project requests. Proposal templates, quality plans, historical and competitive analysis will allow you to budget resources for the purpose of optimizing profits and customer satisfaction. Read our article on Strategic Customer Analysis.

Today’s E.O.W is about encouraging your accounting team to embody a more client-centric approach to accounts receivable by asking smart questions that glean insights into what clients value most and what their priorities are. To truly understand that customer everyone must be part of the customer service spectrum because anybody in the company can affect how the client sees the company. This also provides the opportunity to realize areas for improvement, for example, reduction of receivable days and optimized value creation.

“Family businesses allow tax savings through income splitting between parents, children or other relatives.”

Freight and shipping costs can eat away at profits but they don’t have to. By having strong auditing, procurement and vendor management processes you can yield better profits. One way to reduce freight costs is by working with suppliers on product innovations that reduce the weight of the product without affecting quality. By designing more sustainable products that in turn reduce waste is an effective way in reducing freight costs.

“By encouraging your A/P team to report and make critical department KPI metrics visual, such as, process cycle time, activity lead times, and cost per invoice with industry and competitor comparisons you realize the opportunity to reduce costs, increase productivity and streamline processes.”

Automation of general accounting functions is not only for large corporations, small businesses can reap in the benefits as well. One of the most important costs you should be aware of is the cost of an invoice. Are you or your accounting personnel spending too much time creating and inputting bills and/or invoices into your accounting software? There are many tools that can assist in helping you reduce these general accounting costs but today I will be discussing a feature in Quickbooks Online that aids in the automation of Accounts Payable and Accounts Receivable activities.

Small Business Accounting Automation

Let’s take a look at Quickbooks Online. How much time are you allotting for entering and processing bills and invoices when that time can be used to better serve your customers and increase sales? Did you know that Quickbooks Online has a feature named, “Recurring transactions”, that allows you to automate your fixed bills and invoices. The time saved by using this feature will allow small business owners to optimize their customer satisfaction ratings.

The “Recurring Transactions” feature, allows you to schedule bills and invoices. You can set when you want the invoice to be created and how often it should be distributed (e.g., weekly, monthly, yearly, et cetera ). Great care should be taken of course when creating the template. It is highly advised to only use this feature for fixed bills and invoices.

The benefit for small business owners who use this feature is tremendous. It means less manual entries, which in turn, allows for more time to do more of what they love.

Next time we will discuss the importance of continually assessing your insurance policies to ensure your are properly covered for current and potential business risks.